TB Problem Qu. 12-203 Ibsen Company makes two products from a common ...

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $50,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

	Product X			Product Y			Total
Allocated joint processing costs	$	30,300		$	20,200		$	50,500
Sales value at split-off point	$	30,000		$	20,000		$	50,000
Costs of further processing	$	23,400		$	17,700		$	41,100
Sales value after further processing	$	49,000		$	56,700		$	105,700

Required:

a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.)

b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?

c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?